Here is a true, empirical, generalization about people’s understanding of political economy: when well intended, smart, honest, and alert individuals observe government’s operation over time, they eventually separate hopes for reform from expectations regarding outcomes. They develop an intuitive understanding of Public Choice economics. 

Here’s what they often see: when government expands beyond the limited functions delineated in the Constitution, it no longer is a guardian of liberty and protector of individuals against powerful public and private interests. It becomes a powerful agent that transfers wealth and opportunities to favored constituencies. This erodes the ethics underlying community and civil society while concurrently squandering scarce concrete and financial resources.  

Allen Johnson is head of Christians for the Mountains, an organization devoted to halting “mountain top removal” coal mining in West Virginia and surrounding portions of Eastern coal country. Christians for the Mountains also works to ameliorate the social, cultural, and environmental consequences of this abominable example of environmental pillage and plunder. (Thanks for the economics lesson Senator Byrd.)

Allen is a friend who participates in FREE’s seminar series for religious leaders. He is a featured presenter in our “Faith, Political Economy, and Social Justice: Lessons from Butte, America” seminar this July. Foundation grants support this program and it includes an excursion to Butte. Once described as “the richest hill on earth,” today it is America’s largest Super Fund site. Yet a rebound, one independent of mining, is likely.

Allen is the author of this week’s FREE Insight, “The War of the Bigs … while the rest of us are Trampled.” Here are samples of his observations: 

“Big Agriculture pushes the net zero energy biofuels sham. Pressure from the big factory fleet fishing industry pushes back federal regulatory harvest quota attempts, leading to disasters such as the cod industry crash in the early 90’s. … Savvy defense industries have learned the art of outsourcing manufacturing jobs into numerous congressional districts. Meanwhile, in all this, Big Media knows where its advertising cash cows graze….

“Government grows big from the incessant clamor for loopholes [favors and advantages] from special interests, yes. And government grows big, too, from going into business itself, and making alliances with business.

“Meanwhile, Big Labor, looking for its own hog’s share of the pie, presses for government funded public works projects, all of course at Davis-Bacon ‘prevailing wages’ that typically are inflated far beyond what the non-government market pays.”

Allen ends with: “What does John Q. Citizen, upstanding, ethical, community-minded, and patriotic, do as he cowers between the bumping obese Sumo wrestlers of big business and big government?” His is the key political economy question for this generation and the next. The answer is slowly emerging.

-John Baden

The War of the Bigs… while the rest of us are Trampled

By Allen Johnson

“Too big.” This phrase angrily resounds throughout national dialogue. “Too big” foams forth from liberal lips who whine about big corporations that muscle out small businesses and “control” Congress. “Too big” rants out from conservative tongues who complain about ever-growing government that chomps at every dollar and regulates every move. Then there is the “big media” of a few corporations that control most of the public information the public reads, hears, and sees. And finally, there are the “wannabe bigs” such as labor unions and religious institutions that had once been really big, have lost some of their heft, but are trying to put on weight again by currying favor with their favorite “big.”

Picture two big-bellied, Sumo wrestlers, pared down to a loin cloth, thrusting and heaving to push the other out of the ring. The training regimen for a Sumo wrestler involves strength, quickness, but also being bigger than the opponent. Sumo wrestlers eat lots of food.

To understand “big,” let’s first look at “little.” A person goes to work to earn a livelihood. With more education, more skill, more experience, more perseverance, that worker might get a “bigger” livelihood (let’s call it money as in “medium of exchange”). Another person might go into business, incurring risk of failure but also prize of success. That businessman hires the first worker, who then gains profits for himself or herself, and also helps profit the businessman. Through multiplying factors, small gets big. Corporations are typically a pooling of assets to get even bigger, with the goal of getting bigger profits.

Businesses do not operate in a social vacuum. The exchange of goods, safeguarding of property, protection from ravaging, and the assurance of economic and social stability involves a social compact, which in a democracy we call “government.” 

When I was a boy, we neighborhood kids would get together almost every summer day to play baseball in a nearby vacant lot. The acknowledged two best players would be captains, each alternately choosing team mates. We would set up our own rules and referee our own games. Sometimes we would argue, but we always worked through spats. After all, we wanted to play ball. We had fun.

We also played organized baseball. We had adults for coaches. Our families came to watch us. We felt more pressure to perform. The games were run by rules that were enforced by umpires. We kids came to play ball, while the spectators came to watch us play. No one came to watch the umpires. Sometimes the umps were yelled at. But without rules and umpires to enforce the rules, the games would be debacles.

Let’s use baseball as an analogy for the National Economy. A number of teams [businesses] sign up to play, each with goals to have a successful season. Rules [government laws] are established  [by society through representative government] to protect players [businesses, consumers, environment] from injury, to guarantee fair play  [no cheating] and to maximize enjoyment of the games [opportunity to make a profit]. Umpires [government officials] are procured to enforce the rules. Sometimes the rules are tweaked so that all the teams, if they try hard, can have a chance for success; otherwise a totally dominant team makes for no fun for the others. “Ok, let’s play ball.”

Everyone today agrees that the “economic game” is broken. Everyone agrees that something is out of balance. Again, we might characterize liberals as saying that “business is too big,” while conservatives say that “government is too big.” So where is the balance?

First, a look back to the history, say the depression of 1893, and the years before and after when unfettered industrial expansion was abetted by limited, hands-off, and commonly, corrupt government. The upshot was an America in which a few people were extremely wealthy, the middle class was small, and the impoverished masses were teeming. Government regulations were, well, almost nil. Indeed, fortunes had been made off government largesse, such as real estate grants to railroads corporations. Do we really want to go back to this time of limited government?

Critics charge that Big Business wheedles government favors at the competitive disadvantage of “Little Business,” so mom and pop stores vested in the life of local communities struggle or sink. Big Agribiz, with its advantage not only in scale of economy but in its dominance in federal subsidies, swallows up little farms, sapping rural community vitality. Big Agriculture pushes the net zero energy biofuels sham. Pressure from the big factory fleet fishing industry pushes back federal regulatory harvest quota attempts, leading to disasters such as the cod industry crash in the early 90’s. In a recent example, Big Investment Business was certainly not adverse to accepting Big Government’s cash in the wake of the 2008 financial collapse, yet now belly-aches about even the tepid regulatory reforms that government half-heartedly attempts. And what about the military-industrial complex with its insatiable appetite at the federal feed trough? Savvy defense industries have learned the art of outsourcing manufacturing jobs into numerous congressional districts. Meanwhile, in all this, Big Media knows where its advertising cash cows graze.

Government grows big from the incessant clamor for loopholes [favors and advantages] from special interests, yes. And government grows big, too, from going into business itself, and making alliances with business.

Meanwhile, Big Labor, looking for its own hog’s share of the pie, presses for government funded public works projects, all of course at Davis-Bacon “prevailing wages” that typically are inflated far beyond what the non-government market pays.

Concerning government regulations, has the pendulum swung too far in the other direction? I suppose an NFL football game could field 22 referees for a game. Certainly more violations would be called. I suppose the game would be “cleaner.” But then, who would want to play, and who would want to watch? “Gee, a penalty on every play…?”

What does John Q. Citizen, upstanding, ethical, community-minded, and patriotic, do as he cowers between the bumping obese Sumo wrestlers of big business and big government? Press the X on the voting ballot? Exercise ethical consumer buying choice? We would do well to figure a way out, because we are getting crushed.